Question

Fresh products were introduced to Walmart in the 1990's. Gradually, more and more Walmart stores start to carry fresh fruits and vegetables. Today, food sales make up half of Walmart's revenue. Target copied this strategy and brings fresh produce to its stores as well. In past years, fresh products are the fastest revenue growing segment in Target.

We all know that the handling of fresh produce is totally different from goods like tissues and cereals. Question is how this change fits into these companies' strategy? What challenges have fresh products brought into their supply chain? How should these companies adapt their supply chain to support fresh produce?

Answer 1

The change fits into the company policies is to increase revenues and provide the consumer benefit by making available these fresh produce. There is also competition among the companies in this industry so no one wants to miss this product segment on their list for doing business.

As fresh products a have short life span and becomes waste soon if not managed properly. It eats up a lot of rack space in retail outlet. There are other issues like incorrect demand forecast leads to over supply of fresh produce and these products have limited and shorter period for consumption so many of it goes as waste.

Supply chain shall be made effective by employing the management principle like Just in Time management which would require having accurate forecasting of these product demand and rightly providing only the required product to be processed through inventory lowering the cost of inventory and preventing spoilage at distribution and storage. Also proper management of safe keeping of these products like using deep refrigerator for storing fresh produce would ensure the freshness of the product.